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CME: U.S.-China Trade War -the Perils of Escalation

Equites closed higher in the first week of May, buoyed by a strong U.S. employment report and hopes that the US and China would finalize a trade deal in Washington this week. Then, on Sunday afternoon (early Monday in China), Washington announced that the 10% tariffs on $200 billion of Chinese goods would increase to 25% on Friday and that 25% tariffs could, perhaps, be applied to an additional $300 billion of Chinese goods. This news sent shockwaves through equity, fixed income, currency and commodity markets.

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